Gold jumped on Wednesday as investors and traders’ caution ahead of US presidential election result. Besides, with 276 voters, a Republican candidate – Trump Donald becomes the 45th President of America. In the next periods, the demand of looking for the safe-haven assets such as gold will certainly increase.
9:00 (GMT), gold climbed to $ 1304.22/oz, up 1.02% from the open price, the biggest intraday rally since Brexit vote.
Fig. Gold D1 Technical Chart
The following factors are main cause:
1. The dollar dropped ahead of the Trump’s win on the path to White House
Today, Donald Trump has been elected 45th President of the United States after a surprising night of shocks. The Republican Party won on Wednesday after capturing Wisconsin’s 10 electoral votes, putting him over the 270 thresholds at 276 voters.
Jitters risng that a Trump’s win could lead to economic and global uncertainty, may also cause dollar sunk. Then, gold prices will surge.
According to a report on Tuesday from the World Gold Council, gold investment demand jumped 44% in the third quarter from an earlier year due to impacts of UK’s exit from out of the European Union and the US presidential election. However, world demand for gold fell by 10% to 992.8 metric tons in the same time as high gold prices discouraged consumers.
The physical gold demand also supports the price when Chinese Gold reservesin October rose to 59.24 million. It was up from 59.11 million/ oz (1,835.5 tons) in September, according to the latest report from People’s Bank of China. Next months, gold demand likely to increase on Chinese New Year, pushing gold price up to new level.
3. Low oil continues to face long-term oversupply
The American Petroleum Institute (API) announced that the prices could go even lower as the energy market grabs an excessive oversupply amid Trump’s win and a weak global economy. In its monthly oil report released on Tuesday (8/11) showed an inventory build of 4.4 million barrels, increase the previous week, and was significantly higher than the expected build of around 1.1 million barrels in the US.
Yesterday, oil prices were higher on Tuesday after the OPEC Secretary- General Mohammed Barkindo stated that Organization of Petroleum Exporting Countries (OPEC) reached an agreement to cut output to help rebalance the crude market to a range of 32.5 million to 33.0 million barrels per day in talks held in Algeria in late September. However, no final details on individual output quotas until its next official meeting in Vienna on November 30.
China imported 6.78 million barrels of oil from abroad in October, down 12.9% from the previous month. This is one of the lowest volumes this year on a daily basis.
Oil set low prices to take an increasing effect on the demand for gold. As a result, which an attractive trend for the gold demand to push the price up.
Finally, the market is also waiting for an official data from the Energy Information Administration (EIA) will be released Wednesday at 10:00 am (EST).
Download PFMTools here and check out your trading skill level